Article
12 min read
How to Hire Using an Employer of Record (EOR) in Israel (2025)
Employer of record
Author
Jemima Owen-Jones
Last Update
June 30, 2025
Table of Contents
What is an Employer of Record in Israel?
Top reasons to use an Employer of Record in Israel
How to hire employees in Israel: Step-by-step guide
Employment compliance tasks an Employer of Record manages in Israel
How much does it cost to hire through an EOR in Israel?
Which Israel EOR should you choose?
Is Deel Employer of Record a strong choice for hiring in Israel?
Hire employees in Israel confidently with Deel Employer of Record
Key takeaways
- Setting up an Israeli entity to hire local talent can take months and cost over ₪118,380 in initial legal, tax, and payroll setup.
- An Israeli Employer of Record lets you engage talent through its local entity, bypassing setup delays, legal costs, and compliance headaches.
- Deel EOR owns its Israeli entity for full control, supports hiring in Israel and 150+ other countries, offers transparent pricing, monitors compliance in real time, and has top G2 ratings.
Israel’s booming tech scene, deep talent pool, and strategic time zone make it a magnet for global hiring. Yet exciting opportunities come with a heavy regulatory lift: mandatory pension auto-enrolment, granular social-security bands, and labor courts scrutinizing every contract. Miss a requirement and you face fines, back pay, or even personal liability.
An Employer of Record (EOR) in Israel lifts that burden. Instead of setting up an Israeli subsidiary, you simply “plug in” to the EOR’s local entity. The EOR acts as the legal employer, manages payroll, remits taxes, and updates policies as laws change.
Deel EOR takes it to the next level, with real-time compliance monitoring, transparent pricing, and an intuitive global people platform—so you can focus on growth, not red tape.
See also: What’s the Fastest Way to Enter Markets and Hire Globally?
What is an Employer of Record in Israel?
An Israel Employer of Record is a licensed local entity that legally employs your team and leases their services back to you through a service agreement. You direct day-to-day work; the EOR assumes statutory obligations—drafting compliant contracts, registering with Bituach Leumi (National Insurance), withholding PAYE income tax, and enrolling staff in mandatory pension fund plans.
Because the EOR is responsible for payroll filings, health insurance, and labor-law compliance, legal liability shifts away from your HQ. Deel EOR’s wholly-owned Israeli entity adds digital workflows, automated tax tables, and continuous legal updates, helping your HR team stay on top of ever-changing employment laws and ensuring compliance.
Deel Employer of Record
Top reasons to use an Employer of Record in Israel
Israel rewards innovation but penalizes non-compliance. An EOR keeps you on the right side of the law.
- Instant market entry: Hire employees in Israel in under a week without incorporating or appointing local directors
- Predictable statutory costs: Social security 4.51%-7.60%, pension funds 6.5%, severance 8.33%—all calculated automatically
- Misclassification defense: Labor courts often re-classify contractors; an EOR issues full employment contracts, defusing back-pay risk
- Mandatory pension auto-enrolment handled: Failure to deposit on time triggers fines. An EOR like Deel deposits on time, every time
- GDPR-level privacy plus local twists: The Privacy Protection Law requires data retention consents; Deel’s IP Guard stores agreements and invention assignments centrally
- No hidden payroll surprises: Monthly PAYE filings are reconciled and remitted before the 15th of the following month, with digital receipts stored securely
Choosing Deel was easy—they offer unmatched compliance and HR support that scales with fast-growing companies like ours. They’ve been the best partner for executing our global hiring strategy.
—Yunjung (Rina) Bae,
Director of People, MarqVision
How to hire employees in Israel: Step-by-step guide
Use this eight-step checklist to make compliant hires through an EOR.
1. Choose an EOR with a wholly-owned Israel entity
Start by confirming the EOR actually owns—and doesn’t merely partner with—an Israeli subsidiary. Direct ownership gives the provider authority to sign contracts, open bank accounts, and interface directly with the Tax Authority, which shortens onboarding and reduces third-party risk and cost. Deel EOR operates its own licensed entity in Tel Aviv, so nothing is subcontracted.
Tip: Ask for the EOR’s registration number with the Registrar of Companies; Deel lists it on every Master Service Agreement (MSA).
2. Book a demo and verify social proof
A live walkthrough reveals whether the platform lets you create job requisitions, assign comp bands, and trigger background checks. To validate real customer experiences, browse third-party review sites—Deel boasts top rankings on G2, Capterra, and Trustpilot reviews.
Tip: Scan case studies from peers expanding into Israel and beyond to ensure industry fit.
3. Request a transparent EOR quote
A solid quote breaks down gross salary, statutory employer costs, and the EOR management fee. In Israel, statutory costs typically run 19.34% to 23.43% of salary once social security, pension, severance, and disability fund are added. Deel summarizes each line item and locks the fee—no FX mark-ups or extra “13th-month” surprises.
Tip: Compare costs before you expand—read our article EOR vs. Entity Costs: What’s More Affordable?
4. Submit a 12–24-month hiring plan
Share projected headcount, job families, and equity plans. The EOR uses this roadmap to forecast payroll funding, negotiate better pension-fund terms, and ensure Labor Relations Board notifications remain current.
Tip: Deel’s Workforce Planning tool surfaces real-time costing so you can adjust budgets instantly.
5. Create the employment contract in the platform
Israeli law mandates a written contract within 30 days of the start date. Deel’s contract generator auto-fills localized clauses—probation periods up to 180 days, IP assignment, confidentiality, and overtime eligibility—and routes the draft for e-signature.
Tip: When creating an EOR contract, ensure the Employment Agreement includes Deel’s standard IP clause.
6. Confirm the candidate’s right to work
Citizens and permanent residents can work freely. Foreign nationals need a work permit. Upload passport scans and existing permits to confirm work authorization.
Tip: Deel Immigration can support visa sponsorship, renewals, and dependent visas and permits.
7. Run the onboarding workflow
Once the contract is signed, the platform collects employee bank details, tax-credit certificates (Form 101), and National Insurance numbers. Deel EOR syncs with major Israeli pension clearinghouses to enroll staff in default pension funds by the first salary run.
Tip: Use Deel Engage to roll out training and performance goals, and Deel IT to provision equipment.
8. Maintain ongoing compliance
After onboarding, the EOR keeps you compliant—calculating PAYE withholding via the latest tax brackets, remitting employer social-security parts by the 15th, and updating leave balances as employees accrue tenure. Deel’s Compliance Hub sends alerts if new collective agreements affect your workers.
Tip: Subscribe to Deel’s compliance newsletter to receive clear and concise summaries of relevant compliance changes.
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Employment compliance tasks an Employer of Record manages in Israel
Below is an overview of the core obligations your record EOR in Israel shoulders so you don’t have to navigate local labor laws alone.
| Category | Key Requirements (2025) |
|---|---|
| Statutory Employer Costs | In Israel, mandatory employer costs range from 19.34% to 23.43% of an employee’s salary and include severance (8.33%), pension fund contributions (6.5–7.5%), national insurance (Bituah Leumi, 4.51–7.6%), a monthly travel allowance (ILS 323), and annual convalescence pay based on seniority. Employers also pay a 0.6% pension agent fee. An optional but common benefit in the tech sector is the Keren Hishtalmut savings plan, with a 7.5% employer contribution, either capped at a salary of ILS 15,712 or uncapped. |
| Employment Contracts & Probation Rules | Employment contracts must include the employee’s full name and ID, start date, gross salary (with a breakdown of base and overtime), transport allowance, vacation and sick leave entitlements, pension terms, termination conditions, and Section 14 compensation terms. "General Manager" is a prohibited job title, though department-specific manager titles are permitted. Fixed-term contracts are legally allowed but come with significant legal risk if terminated early. Probation terms are not fixed by law. Non-compete clauses are enforceable during employment and may be valid post-termination if compensation is provided, though enforceability depends on the employer’s legitimate business interests. Non-solicitation clauses are only enforceable during employment and lack legal effect after termination. Both may be used as deterrents, but their legal weight is limited. |
| Pay and Working Hours | The minimum wage is set nationally and updated annually in April. As of April 1, 2025, it is NIS 6,247.67 per month or NIS 34.32 per hour. The standard workweek runs Sunday to Thursday, totaling 42 hours per week, 8.4 hours per day, or 182 hours per month. Shabbat, from Friday evening to Saturday night, is a legally protected rest period, and most workplaces close or limit operations during this time. Overtime is regulated by law, but many employers structure pay to include a fixed “global overtime” component, meaning additional hours are not separately compensated. |
| Payroll & PAYE Compliance | Employers in Israel must run monthly payroll and withhold applicable income tax, national insurance (Bituah Leumi), and health insurance contributions at source. Payments must be made to the relevant authorities by the 15th of each month for the previous month’s earnings. Payslips must be provided to employees and include a breakdown of gross salary, deductions, benefits, and net pay. Payroll records must be kept for at least seven years to meet legal and audit requirements. Compliance with Israel’s PAYE (Pay-As-You-Earn) system is mandatory, and failure to remit accurate contributions on time may result in fines or penalties. |
| Vacation and Public Holiday Allowances | Employees are entitled to a minimum of 12 paid vacation days per year, accrued monthly from the start date. Unused days roll over without limit, and employees may carry a balance of up to -3 days. Time off is paid out on termination. The vacation year runs from January 1 to December 31. Israel recognizes 9 national public holidays, with no replacement day if they fall on weekends. Employees receive a shortened workday before holidays and cannot work on public holidays by law. Non-Jewish employees may choose alternative holidays based on their faith at the start of the tax year. |
| Income Taxes | Israel uses a progressive income tax system with rates from 10% to 50%, applied to salary, bonuses, and certain allowances. Taxes are withheld monthly through a pay-as-you-earn system, and most employees with a single income source do not need to file an annual return. Employees with multiple employers, high incomes, or who qualify for refunds must file by April 30. Tax credits are granted based on residency and personal status, reducing monthly withholdings. Employees with more than one income source must submit a tax coordination form to avoid automatic 47% withholding. Key documents include the 101 Form (onboarding) and 106 Form (annual summary). |
| Expenses, Allowances, and Bonuses | Employees in Israel can be reimbursed for business expenses directly related to work and properly documented; these reimbursements are generally non-taxable, while undocumented or domestic expenses, such as meals and phone use are taxable as allowances. International travel expenses require a detailed Travel Form with receipts. Allowances, including the statutory travel allowance (NIS 323/month) and discretionary benefits like work-from-home or gym memberships, are taxable and usually submitted manually. Bonuses, including performance incentives and backpay, are taxed as regular income and may increase withholding rates in the payment month. |
| Statutory Benefits & Pension Requirements | Employers must provide statutory social security (Bituah Leumi) contributions, including public health and unemployment insurance, with employer rates of 4.51% to 7.60% and employee rates of 4.27% to 12.16%, both subject to limits. Pension contributions are mandatory, typically between 6% and 7.5% for employers and 6% to 7% for employees, managed by third-party providers chosen by employees. Severance pay is also statutory, at 8.33% of monthly salary per year worked, with no employee contribution. Optional benefits include the Educational Fund (Keren Hishtalmut) with employer contributions around 7.5%, private health insurance, and travel or kidnap insurance, which employers may offer but must apply equally if provided. |
| Maternity, Paternity, Parental, Adoption & Foster Leave | Israel provides statutory maternity and paternity leave based on employment history and national insurance contributions. Mothers are entitled to 15 or 26 weeks of maternity leave, with a maximum of 15 weeks partially paid by national insurance. Eligibility for full or partial pay depends on the employee’s contribution history. Pregnant employees can also take up to 40 hours off for medical appointments, separate from sick leave. Fathers are entitled to five calendar days off after birth—three deducted from vacation and two from sick leave. Parental leave can be shared if the mother waives part of her entitlement, with rules requiring overlapping days and a minimum 21-day consecutive leave by the father. Adoptive parents, surrogate mothers, and designated parents also qualify for leave, subject to specific conditions. Employers cannot dismiss employees during leave or within 60 days after it ends. |
| Sick Leave, Bereavement Leave, and Carer’s Leave | Employees accrue 1.5 sick days per month, up to 18 days per year, which can roll over to a cap of 90 days. Part-time employees receive the same entitlement. Legally, employers pay 50% from days 2–3 and 100% from day 4 onward, though many pay full salary from day 1. Medical certificates from health funds or via remote consultations are required, with new options available from September 2024. Up to 8 sick days can be used for caring for a sick child, but only one parent can take this leave at a time. Employees performing military reserve duty are entitled to full paid leave, with reimbursement capped at 47,465 ILS/month from the government. Spouses of reservists serving during the Iron Sword War may also take additional leave under defined conditions, including daily one-hour absences for parents of young children. Bereavement leave allows for 5 paid working days following the death of a spouse or first-degree relative. |
| Terminations/Dismissals, Redundancy, Severance, and Resignations | Employment termination in Israel carries high legal risk and must follow strict procedures. Employers must hold a formal hearing before dismissing an employee. A 30-day notice period applies after probation; during probation, it ranges from 1 day per month to 2.5 days per additional month worked. Employers may offer payment in lieu of notice or place the employee on garden leave. Employees are entitled to statutory severance (8.33% of salary) held in a fund, and unused vacation and convalescence pay must be settled. Termination requests should allow at least 30 days for processing. During wartime (until 1 October 2024), employees are protected from dismissal if absent due to compliance with state directives or if returning from military reserve duty (with 60 days of dismissal protection). |
| Misclassification Risk | Worker misclassification risk in Israel is high. Courts and regulators closely examine work relationships, and employers found to misclassify contractors as employees face serious liabilities. Key factors used to assess status include the level of control, integration into the business, economic dependence, ability to work for others or provide substitutes, and whether the worker receives direction, tools, or benefits. If a contractor is deemed an employee, the employer must retroactively provide full employment entitlements—such as pension, severance, paid leave, and recuperation pay—on top of previously paid fees. Regular audits are essential to ensure compliant worker classification. |
| Data & IP Protection | Israel’s updated Privacy Protection Law (PPL) introduces major changes, aligning it with EU-style data protection. The amendment expands enforcement powers, requires clearer consent notices, narrows database registration obligations, and introduces new roles like the Data Protection Officer (DPO). Companies handling sensitive data, tracking user behavior, or operating large databases may be required to appoint a qualified DPO with direct reporting to the CEO. Individuals gain broader rights, including access, rectification, and deletion of personal data, and can now seek compensation for violations—even without proving damages. The Privacy Protection Authority (PPA) can impose substantial fines and order companies to halt unlawful data processing. Businesses operating in Israel should audit data practices, update privacy notices, assess DPO requirements, and prepare for new compliance standards one year after enactment. |
Continuous Compliance™
How much does it cost to hire through an EOR in Israel?
EOR hiring cost comprises three parts:
- Employee’s gross salary: market-driven. For example, a senior full-stack developer averaged ₪23,896 per month in 2025.
- Statutory employer costs in Israel typically add 19.34% to 23.43% on top of gross salary. This includes up to 7.6% for social security, 6.5% to 7.5% for pension contributions (which cover disability insurance when required), and 8.33% for severance pay.
- EOR management fee: Deel EOR charges a flat monthly amount that covers entity maintenance, payroll processing, legal updates, and in-house counsel support—no onboarding or off-boarding surcharges.
| Factor | Your own Israel entity | Deel EOR |
|---|---|---|
| One-off setup costs (company registration, legal, banking) | ₪118,380 | ₪0 |
| Ongoing annual costs (bookkeeping, audits, payroll corporate tax) | ₪125,517 | ₪0 |
| EOR annual management fee | ₪0 | ₪24,233 per employee |
| Estimated total annual cost | ₪243,897 | ₪24,233 |
| Time to first hire | 1 month | 1 business day(s) |
With Deel EOR, every expense is itemized in a single invoice, and you avoid surprise back-tax bills. Calculate your cost per hire instantly using the Deel Employee Cost Calculator.
Global Hiring Toolkit
Which Israel EOR should you choose?
Selecting the right EOR partner is more than comparing price tags. Evaluate each provider on four pillars:
- Entity ownership: A wholly-owned Israeli entity keeps accountability clear. Deel EOR owns and operates its Tel Aviv entity, so no compliance tasks are subcontracted.
- Compliance expertise: Look for in-house labor lawyers who track daily Knesset updates. Deel’s Compliance Hub, backed by a local legal team, issues real-time alerts inside the platform, letting you adapt policies before infractions occur and ensuring compliance.
- Platform breadth: Beyond payroll tax compliance, the EOR should provide the functionality and resources to provision background checks, equity, and employee training.
- Global coverage: If Israel is just one node in a broader expansion, a provider active in 150+ countries keeps processes consistent. Deel’s unified platform means your HR team learns one workflow, not ten.
See also: Owned Entity vs. In-Country Partner: The Best Choice for Global Hiring
Discover how Lloyd’s List Intelligence expanded to new markets with Deel
Lloyd's List Intelligence provides business intelligence, data, and analysis on maritime trade and operations.
As a leader in a complex and regulated market, they faced challenges in expanding and managing teams across multiple locations. They explored different ways to set up entities but found it complicated, as each country had its own payroll regulations and tax requirements.
“We just didn’t have the economies of scale, time, and resources to be able to set up entities in each of those different locations. We went with Deel because they were able to provide us with everything we needed in one platform.”
—Hetty Townsend, APAC People And Culture Business Partner, Lloyd's List Intelligence
Is Deel Employer of Record a strong choice for hiring in Israel?
Yes—Deel stands out as a G2 leader for Employer of Record services, offering a top-tier solution for hiring employees in Israel. With Deel’s wholly-owned local entity, you avoid the pain and delays of setting up your own company, while gaining instant access to Israel’s tech talent and ensuring airtight compliance with local labor laws.
- G2 leader: Rated #1 for user satisfaction and market presence among EORs
- Wholly-owned entity in Israel: No reliance on third parties; fast, direct onboarding
- Hire in 150+ countries: Unified platform for all your global hiring—not just Israel
- Transparent pricing: Fixed monthly fee covers all compliance, payroll, and entity costs
- Real-time compliance monitoring: Automatic updates on Israeli labor, tax, and pension rules
- Local statutory compliance: Handles social security, pension auto-enrolment, severance, and PAYE
- Workforce planning: Model costs, create job requisitions, and benchmark salaries
- Onboard in under a week: No waiting for entity registration—start hiring immediately
- Integrated employee benefits and equity: Build tailored packages to attract Israel’s top talent
- Visa and immigration support: Seamless visa, work permit, and relocation help, if you need to hire outside Israel, too
Deel’s EOR platform lets you scale quickly in Israel with less risk, less admin, and more confidence—so you can focus on growth while we handle the fine print.
See also: More Than a Service: EOR as a Strategic Partner in Business Growth
Hire employees in Israel confidently with Deel Employer of Record
Ready to streamline your hiring process in Israel without the headache of entity setup or legal guesswork? With a Deel EOR demo, you’ll see how you can onboard top Israeli talent in days—not months—with transparent, fixed pricing and no hidden fees. Our platform automates every compliance step, so you stay protected from costly payroll tax or misclassification errors.
With Deel EOR, employers and employees benefit from a single interface to manage hiring, payroll, statutory benefits, and employee benefits for Israel and 150+ other countries—no need to juggle multiple vendors or worry about local law changes. Experience the fastest speed-to-hire on the market and predictable costs from day one.
Ready to see how easy compliant hiring in Israel can be? Book a Deel demo today.
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FAQs
How fast can I hire an employee in Israel through Deel?
Most clients onboard new hires in under a week—no entity registration or local bank account needed.
Do I need an Israeli bank account to pay employees?
No—Deel’s EOR manages payroll, including all local payroll payments and statutory remittances, on your behalf.
What type of contract will my Israeli employee get?
Deel issues a locally compliant written employment contract, including required clauses on probation periods, IP, and confidentiality.
Is probation mandatory in Israel?
Probation is common (up to 12 months max) and clearly defined in Deel’s contract templates.
How does tax withholding (PAYE) work?
Deel calculates and remits all required income tax, social security, and health insurance contributions monthly to Israeli authorities.
When are payroll deadlines in Israel?
Payroll must be processed monthly, and all taxes and benefits must be remitted by the 15th of the following month. Deel EOR automates this for you.
What benefits are mandatory in Israel?
Statutory benefits include pension fund auto-enrolment, severance (8.33% per year of employment), health insurance, and social security—Deel manages all required contributions.
Can I offer extra perks or bonuses?
Yes—Deel can help you design and administer supplementary employee benefits and performance bonuses to attract top Israeli talent.
How does IP protection work for Israeli employees?
Under Israeli law, IP created during employment defaults to the employer; Deel’s contracts and IP Guard tools keep your rights secure.
What happens if I need to terminate an employee?
Deel guides you through Israel’s strict notice, documentation, and severance rules to minimize legal risk and ensure compliance.
About the author
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
